On 13 November 2025, the European People’s Party (EPP), home to Commission President Ursula von der Leyen, sided with the far right in the European Parliament to push through amendments slashing corporate sustainability regulation. At the centre of this political drama is the so-called Omnibus I Directive, which seeks to “simplify” green reporting rules for businesses under the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). However, this simplification exercise has proceeded along shaky assumptions, opaque procedures, a questionable technique and an indefensible constitutional basis. Its undemocratic and potentially unconstitutional nature, I argue, marks a triumphant comeback for a resilient neoliberal EU. Concretely, Omnibus I follows a governance rationality that privileges market logics over collective authority and systematically insulates the economic realm from democratic control. Seen through this lens, it represents not just a rollback of collectively negotiated sustainability protections but a deeper depoliticization of the internal market from democratic contestation.

A misguided exercise to increase competitiveness

Omnibus I is part of the simplification packages proposed by the new Commission, covering not only sustainability but also investment, agriculture, defence, chemicals, digital regulation and counting. These measures are underpinned by the Commission’s U-turn from the European Green Deal to a Competitiveness Compass. It claims that this agenda follows the blueprint laid out in the Draghi Report – more accurately, a version as they read it. The Report warns that the EU is trailing behind the US and China in economic competitiveness, labour productivity and cutting-edge innovation. To bridge this innovation gap, the EU must cut red tape and reduce administrative burdens for businesses, especially SMEs, and it must do so quickly. These assumptions are questionable. First, many mainstream indicators confirm that European countries are doing quite well when it comes to not only competitiveness, productivity and innovation – but also happiness, human development and anti-corruption. What is perceived as the lack of competitiveness is probably the absence of EU-based global (digital) conglomerates, though it is not obvious why such giants should be the decisive benchmark. The factuality, let alone the urgency, of the Commission’s justification is not fully substantiated. More importantly, a crucial question that gets lost in this conversation is whether we should measure well-being and prosperity solely by reference to GDP growth and market efficiency. Moreover, the relationship between regulation and innovation is complex and contested. Even if regulation seemingly slows down innovation, a proper cost-benefit analysis should also account for its economic and non-economic benefits. In fact, innovation without regulation can be quite dangerous. Finally, even if bridging the innovation gap warrants reorienting regulation, simplification (streamlining regulation) is not the same as deregulation (removing regulation). Additionally, the urgency argument also cannot justify short-circuiting democratic processes.

A rickety road to Omnibus I

Omnibus I is designed to simplify green reporting rules and sustainability due diligence obligations under the CSRD and the CSDDD. Interestingly, the CSDDD was passed only last year after lengthy negotiations, surprising horse-trading and difficult compromises. Yet even before its implementation, it is subject to another round of political tug-of-war. One frequently cited justification for cutting corporate sustainability rules is to save compliance costs for businesses – estimated by the Commission to be around 4.4 billion euros under the CSRD and 320 million euros under the CSDDD (even more under the Parliament’s position as claimed by Omnibus I rapporteur Jörgen Warborn). However, this framing conveniently ignores the benefits of sustainability reporting, as well as the costs of inaction on climate change. The key measure of Omnibus I – to drastically reduce the personal scope of sustainability reporting – does not really simplify anything. It simply exempts many companies. The removal of EU-wide regimes on climate transition plans and civil liability may simplify the case for business as usual (though only at the EU level), but it is hardly a balanced or forward-looking solution. This is especially true because mounting evidence suggests a global momentum for sustainability disclosure and responsible business. The Omnibus I will thus likely increase administrative burden and legal uncertainty for EU companies, leaving them to navigate between mandatory and voluntary standards across jurisdictions. It punishes those already complying and rewards those delaying transition. Technical simplification becomes a cover-up for large-scale deregulation.

These shaky assumptions are reinforced by the lack of procedural integrity. The complaint lodged by eight civil society organisations to the European Ombudswoman is telling. It pointed out that the Commission departed from key procedural requirements in its own Better Regulation Guidelines and failed to carry out a public consultation and an impact assessment without a proper justification. These procedural shortcuts are compounded by the Commission’s (motivated) over-reliance on the “omnibus” technique – the bundling of diverse legislative revisions into one technical consolidation package. It has been argued that this method obscures substantive policy changes under the guise of procedural efficiency and risks undermining the Union’s constitutional integrity. Besides these procedural shortfalls, as warned by the UN Office of the High Commissioner for Human Rights and many other legal experts, Omnibus I is also substantively indefensible on many grounds, including the principle of non-regression, environmental and human rights obligations under the Charter of Fundamental Rights of the EU and the European Convention on Human Rights, and the state obligation to address climate change (through effective regulation of private actors) as confirmed by the ECtHR and the ICJ.

Some (not so) hidden motives: political realignment, geopolitical pressure and corporate lobbying

While not out in the open, one can identify several political-economy undercurrents driving the EU’s somewhat desperate retreat from sustainability regulation. To begin with, Member States are deeply divided: the Franco-German alliance is determined to kill EU supply chain regulation altogether, while pushback is coming from Member States like Denmark and Spain. This divide can, of course, be traced to the ideological inclination of right to centre-right politicians towards market liberalism. However, it also signals a broader realignment in party politics. Many centre-right parties are drifting further rightwards and doubling down on issues like immigration and identity politics to placate the far-right and win back voters. Climate politics has increasingly been drawn into this dynamic: farmers’ protests across Europe have sought to recast green regulation as a cultural grievance, while the cost-of-living and housing crises have been used to portray climate policy as a cause of ordinary people’s hardship. In this light, the EPP’s realignment with the far right marks the beginning of the end of the long-standing pro-European majority. Moreover, such cooperation may yield short-term political gains – placating both pro-business and anti-climate constituents – but the mainstreaming of far-right politics and the erosion of a stable pro-European majority bode ill for the Union’s long-term future.

Additionally, there is a clear geopolitical dimension to the simplification packages. The EU’s pivot towards competitiveness underlies the logic of an inter-state economic race, especially in producing global conglomerates. Ironically, its global competitors seem to agree with the EU’s deregulatory move but only find it not far-reaching enough. The US and Qatar issued a joint open letter on 22 October 2025, urging Brussels to further weaken the CSDDD and warning of potential repercussions for LNG supply, investments, and trade. A coalition of 16 US State Attorneys General has directly warned the country’s Big Techs, including Microsoft, Google and Meta, to defy the EU’s sustainability regulations. While the EU denounces such pressure campaigns and vows to “set our own standards”, the recent US-EU trade deal explicitly commits the EU “to address US concerns regarding the imposition of CSDDD requirements on companies of non-EU countries with relevant high-quality regulations”. In an era where regulatory policy is increasingly treated (or even weaponised) as a strategic asset, this concession risks normalising external interference in EU regulation and setting a dangerous precedent – especially given that the Trump administration has been loudly berating the EU’s digital regulation as well.

Finally, corporate lobbying has played an outsized role in shaping the Omnibus I. While the Commission dispensed with both an impact assessment and a public consultation, it did host industry representatives in closed-door meetings before publishing its proposal. Corporate interests have already succeeded in watering down the CSDDD, but they are now more aggressively lobbying for its further dilution. For example, ExxonMobil has intensely campaigned for the rollback of the CSDDD, including lobbying the US government for the CSDDD’s inclusion in the aforementioned US-EU trade deal and threatening to pull back investment in the EU. TotalEnergies and Siemens, on behalf of 46 European companies, have directly called on French President Emmanuel Macron and German Chancellor Friedrich Merz to dismantle the CSDDD, though several of these companies have since backtracked. Though lobbying may be a normal part of political processes, the Commission’s one-sided appeasement is disturbing – as made visible by the striking overlap between its proposed text and the demands of key industry groups. These patterns are emblematic of a regulatory environment increasingly shaped by private power, where economic clout is consolidated as political leverage with little resistance.

A comeback of the neoliberal EU – or has it ever left?

In the heyday of the European Green Deal, many have cautiously celebrated it as a transformation of EU governance and a departure from neoliberal orthodoxy. The Omnibus I saga has revealed all too well the resilience of neoliberalism – its ability to adapt, mutate and survive. While the deregulatory thrust is perhaps the most visible expression, this neoliberal revival operates on several fronts. First, the flirtation with conservative values and identity politics is a classic strategy for papering over neoliberalism’s internal contradictions. As institutionalised market individualism erodes social solidarity, culture and identity are mobilised to fill the void and prevent the dissolution of neoliberalism. Once climate policy becomes framed as us versus them – urban elites versus rural citizens, cosmopolitan progressives versus ordinary workers – environmental governance becomes collateral damage in a culture war. Second, neoliberalisation has been spread through inter-state competition, making fostering globally competitive territories a hallmark of neoliberalism. While the EU and the US may have disparate self-interested goals, they are playing by the same neoliberal rulebook in the same global economic race. Third, neoliberalism transforms the state itself, turning it to work on behalf of the market. Corporate lobbying has clearly pushed the EU in that direction, and the Commission and many political groups in the Parliament are clearly acquiescing.

Ultimately, neoliberalism aims to depoliticise the market as a self-sufficient, autonomous institution free from democratic control. Critics have sometimes described the Omnibus I process as overpoliticised, citing parliamentary brinkmanship, coercive negotiations, and partisan spectacle. But this misses the point: the Omnibus I is partisan in appearance, yet depoliticising in effect. From the get-go, the project was reduced to a one-sided representation, as the Commission firmly gripped and instrumentalised its right of initiative in deference to corporate interests and external pressures. Participation from NGOs, civil societies, academia, and other stakeholders was largely sidelined and ignored. Political choices – how to regulate businesses in the climate transition – are reframed as technical necessities, how to simplify reporting standards, while parliamentary politics prioritise short-term wins over the common good. And the core of the law is to enable corporate self-regulation without accountability – which can indeed be said of the reliance on disclosure and due diligence as such. From form to substance, Omnibus I enacts a quintessential neoliberal project: a market shielded from democratic oversight. In this light, the process does not merely weaken sustainability governance; it erodes the very core of the EU as a democratic polity.

It ain’t over till it’s over – the vote in the Parliament is not the end of the story, as trilogues are still to come. But the process is telling enough and cautions against any complacency in the way forward. It exposes a Union that governs for markets rather than through citizens, an institution that remains trapped in the cycle of technocratic crisis management that it claims to transcend, and a Europe that has not so much returned to neoliberalism as revealed that it never truly left.

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